The gap between time-weighted and dollar-weighted returns is greater in volatile, narrow funds, while diversified, all-in-one allocations tend to keep investors closer to the posted returns.

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As of this writing, just seven stocks make up more than a third of the S&P 500. Collectively, those seven stocks (called “The Magnificent 7”), have increased in value by almost 700% over the last ten years.

One of them — Nvidia — has increased in value by more than 25,000% in that period, which means $100 invested in that stock in 2015 would be worth more than $25,000 today. (3) It’s tempting to look at that case and decide to put all your money on the most speculative, high-return stock you can find. But for every Nvidia, there are thousands of promising companies that didn’t return as much.

Even the other six members of the ‘Mag 7’ put together haven’t returned that much, a group that includes Amazon, Microsoft, Meta (Facebook), Tesla, Apple and Google. If you bet on a single stock, you might also pick a company like Enron, Worldcom or WeWork that goes bankrupt.

Practicing investing discipline by keeping your money in an all-market fund, practicing dollar-cost averaging, and resisting the temptation to chase double-digit yearly returns will instead give you respectable returns on your money.

After all, it’s better to get rich slowly than to lose your investments fast.

Investing is always a trade off between risk and reward. For older people, especially those within a decade or two of retirement, predictable results are preferable to big ups and downs.

A steady 15% over ten years will be easier to stomach than swings from 25% up one year to -15% the next. The real test is what you can live with without bailing out at the worst moment.

According to data from Gallup, 62% of Americans have money invested in the stock market (4), a figure that has been trending upwards since a decade of lower participation between 2010 and 2022.

CNN reports that investments in the stock market account for an all-time high of 45% of U.S. households’ financial assets in 2025, and record-high returns are boosting wealth for these families. However, because so many people now have wealth tied to stocks, downturns in the market will have more influence on the overall U.S. economy. (5)

Funds and ETFs are built to lower risk by spreading your money across many holdings. The larger and more diversified the fund, the less any one stock or sector can hurt you. Broad market index funds often hold hundreds or even thousands of companies, which helps smooth the ride and keeps you in the game.

The best way to use funds is with a plan you can follow. Set up regular contributions so you buy through highs and lows. Resist the urge to jump from your current fund to whatever looks hottest today: chasing performance often leads to buying high and selling low.

It doesn’t hurt to consult a financial advisor and stick with investments you understand. A steady approach will not only protect you from stormy markets, it also narrows the gap between what your funds earn and what you actually take home.

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We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Morningstar (1); Wealth Management (2); Yahoo Finance (3); Gallup (4); CNN (5).

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.